How CPF Life Can Enable Retirees Above 65 To Have New Credit Cards

Payouts are among income streams banks consider when assessing a retiree's eligibility

- Tan Ooi Boon

If you have been topping up your CPF Retirement Account to plan for higher payouts from age 65, here's another piece of good news—the lifelong monthly income from CPF Life will give your creditworthiness a boost should you need to apply for a new credit card or loan.

Monetary Authority of Singapore (MAS) rules state that people who are over 55 and retired must show they have an annual income of at least $15,000 if applying for an unsecured loan facility such as credit cards.

While the MAS does not prescribe what income banks must consider when assessing a retiree's eligibility, it says that regular payout streams such as rent, interest, dividends, or annuity payments from CPF Life or similar products can be considered in such assessments.

But you must prove that you are earning this income to pass the test.

In an odd twist, it means that older retirees will be more creditworthy than younger seniors as the CPF Life monthly payouts start only after a person hits 65.

But once the monthly deposits appear in their bank accounts, those whose payouts meet the MAS threshold will have little difficulty in proving this income as the payments are stable and guaranteed by the Singapore Government.

Take, for example, retirees hitting the age of 65 in 2025. They will receive monthly payouts of up to $1,300, or $15,600 a year if they had set aside at least $161,000 as their full retirement sum a decade ago.

Those who had topped up the enhanced retirement sum to $241,500 then would pass the MAS threshold comfortably as they will get $1,700 a month, or about $20,000 a year.

Indeed, if you are hitting 55 in 2025, you can give your annual retirement income from age 65 a big jump if you plan for the current CPF Enhanced Retirement Sum of $426,000. Doing so will enable you to receive $3,300 a month, or $39,600 a year—more than twice the MAS threshold.